Context Of Investment Research Articles

Moral luck in investment contexts: We consciously find unprofitable investments less moral.

Moral luck refers to whether an actor is morally praised or blamed for an action whose outcome they could not influence. In two studies, we investigated the behavioral importance of this phenomenon in the realm of investments, which has become increasingly subject to ethical evaluations. In our first online experiment, we examined whether people's moral evaluation of an investment decision depended on its arbitrary outcome and whether their interpretation of the nature of the decision was driven by this outcome. Our results showed that profitable investments were considered more moral than unprofitable investments. Moreover, profitable investments were labeled "investments" instead of "speculation" or "gambling" more often than unprofitable ones. In our second study, we asked the subjects to assess investments independent of the outcome. After the outcome was announced, the subjects were given the opportunity to reflect and change their initial decision. The results show that people change the moral evaluation and label of investments when told that it had a bad outcome. This observation was stable across different investment contexts. These findings suggest that we must be careful with the increasing moralization of investment decisions and be sensitive to our cognitive biases.

Shifting the Focus to Measurement: A Review of Socially Responsible Investing and Sustainability Indicators

An increasing number of investors is including sustainability considerations in their investment processes. This can improve both financial and corporate sustainability performance. The emergence of sustainable investing as an academic research field has been accompanied by considerable interest from the industry. Despite its importance, there is still no uniform understanding of what a socially responsible investment (SRI) comprises. There is a multitude of similar terms that are not clearly defined and delineated, accompanied by a lack of a uniform understanding of how sustainability should be measured in the investment context. The resulting confusion hinders conceptual clarity, a material barrier for both scholarly and practitioner endeavours in the field. We try to address these issues by conducting a structured literature review based on database searches and cross-reference snowballing. We aim to provide a synthesised and unified definition of SRI and ancillary terms and to draw attention to the exact sustainability measurements. We (1) outline the history of the concept, (2) concisely define SRI and related terms, (3) propose a trinomial sustainability indicator framework (the Cambridge SRI indicator framework) for conceptualisation, and (4) use this framework to provide a structured overview of sustainability indicators for SRIs.

Factors Driving Consumer Adoption of Savings & Investments FinTech Applications in the UK.

Financial Technology (Fintech) has become a central element of modern financial life, constantly expanding choices, and shifting ways in which individuals consume and interact with financial services (Leong & Sung, 2018). According to the EY Global FinTech Adoption Index, the percentage of FinTech users is increasing, and has increased significantly from 16.0% in 2015 to 33.0% in 2017 (EY, 2017). A follow up study in 2019 showed that fintech adoption and awareness continues to increase and adoption of FinTech services has reached 64% across the globe (EY, 2019). Technology adoption has become a popular area of study within the information systems literature among researchers in a quest to continually understand the various factors that influence individual acceptance and use of emerging technology (Granic & Marangunic, 2019). In the financial industry, there is evident shifting and switching from traditional financial outlets to more convenient fintech solutions that is driven by changing customer preferences because of advances in technology (Bernardo, 2017). This research aims to establish key drivers of this shift and factors that explain consumers’ adoption and use of fintech solutions. The identification of the drivers of this migration towards fintech not only gives better insight into motivations of this migration to developers but also from a regulatory perspective could help in monitoring the developments in the financial system and stability of it as a whole. There is limited empirical studies explaining adoption of Fintech in financial services, (Singh, Sahni, & Kovid, 2020). This research focuses on the technology of savings and investments apps and proposes to create a conceptual framework that extends the generalisability of the Unified Theory of Acceptance and use of technology (UTAUT) (Vankatesh, Morris, Davis, & Davis, 2003) and Self-Efficacy (Bandura, 1986) theories towards evaluating and understanding factors that drive Fintech adoption by integrating financial consumption attributes such as perceived risk, trust and security alongside the core constructs of UTAUT and Self Efficacy theories. These factors are not included in the theories being tested but are highly pertinent to the study of adoption of fintech in a savings and investment context because of the nature of products involved. This is something that fills a gap in knowledge as Vankatesh, Thong & Xu (2016) highlighted it as needing further research after reviewing the UTAUT theory in 2016 from its original version of 2003.

Accelerate the Creation of the cross agency Human Services Dataset.

ObjectiveDevelop a digital solution for automated data ingestion and rapid update of the large-scale Human Services Dataset (HSDS) which brings together data from across government to take a powerful view of the service usage to improve outcomes of communities. ApproachThe Centre for Health Record Linkage (CHeReL) hosts a secure, high-performing data linkage system, including a Master Linkage Key (MLK) of administrative health datasets, and generates linked data to inform policy decisions. Since 2018, CHeReL has also been annually linking over 70 frontline datasets to create a large-scale longitudinal linked dataset of over 2.5 billion records. Over the course of 2021, the CHeReL led a project to incrementally improve the currency of the HSDS in compressed timeframes. This provided opportunity to assess value and feasibility of more frequent updates to the dataset within the evaluation and investment context. ResultsThe automated data Ingestion and validation led to a significant reduction in the data processing timeframes for the Accelerated linkage. We observed 80% reduction in Data ingestion and 75% reduction in data validation. The digital solution also allows asset owners to register and approve new data providers, monitor their data provision in real-time and report on data sourcing. This provides transparency to the Asset Owner and reduces the need for time-intensive and manual processes to jointly monitor data provision with the Data Linkage Centre. The digital solution also has the capability to support Data Providers automate their data feeds and provide on a regular basis through a secure non- touch process. This reduces on-going workload and ensures on-time provision. ConclusionThe process requires a systematic change in the upstream data source, and we requested participating agencies to send us data in an agreed format. The receipt of files in standard format is pivotal for reducing the overall timeframes of HSDS creation and leverage it for policy and investment purpose.

“Let’s have a chat!”: a field study on relational governance in the evolution of new venture-accelerator relationships

ABSTRACT Cooperative behavior can facilitate successful relationships between new ventures and investors after investment but also during partner selection. This view may apply especially to accelerators, which differ from other investors by investments at the earliest venture-development stages, significant collaboration between new ventures and investors, and fast decision-making. However, prior research is insufficient to describe the role of relational governance between new ventures and accelerators. We conduct ethnographic research and twenty interviews to determine how relational governance is built into and influences how the new venture-accelerator relationship emerges. Our findings reveal that process-based trust and relational norms are developed earlier in this relationship than research from other investment contexts suggests. We derive a framework that indicates that actors include in their partner-selection processes elements that allow them to build these relational governance mechanisms, such as interacting (e.g., having a chat) and aligning future behavior, early on. We theorize that they do so because they cannot rely on ventures’ track records and seek partners with whom transactions can be defined in the short term and with whom significant collaboration is possible. Our work contributes to relational governance theory in new venture-investor relationships and recent efforts to understand accelerators.

How to de-bias investment judgements–unpacking bias and possible remedies in a capital investment context

PurposeResearch on biases in investment decision-making is indubitably important; however, studies in this context are relatively scarce. Unpacking bias has received attention in the psychological literature yet very little attention from management accounting research. This bias suggests that the perceived probability that an event will occur generally increases when the event's description is unpacked into a disjunction of subevents. The authors hypothesize that for a capital investment decision context, managers' judgement of the probability of a future event depends on whether the event is described as one packed event or is unpacked into several disjoint subevents. Additionally, the authors propose that altering the format of the description of an event's occurrence from percentage values to relative frequencies reduces unpacking bias.Design/methodology/approachTo test the study’s hypotheses, the authors conducted two experiments based on a 3 × 2 mixed experimental design in which manager participants were asked to estimate the failure probabilities of technical systems in the context of an investment decision.FindingsThe authors provide evidence that unpacking bias occurs in an investment scenario, which can be characterized as a high-stakes decision context. Changing the format in which probabilities are presented from percentage values to relative frequencies significantly reduces the bias.Research limitations/implicationsAdditional instructions did not further reduce unpacking bias.Practical implicationsFor investment decisions under uncertainty, performance indicators in management templates should be presented in relative frequencies to improve managerial decision-making. The fact that the authors could not show an additional effect of instructions in management accounting reports indicates that it is challenging for management accountants to reduce the biased decision-making of managers by “teaching” them through the provision of instructions.Originality/valueThe authors contribute to accounting research by illustrating unpacking bias and by deriving a debiasing mechanism in a capital investment decision context.

Owls, larks, or investment sharks? The role of circadian process in early-stage investment decisions

Investors in early-stage companies want to detect and select high-potential opportunities to maximize their long-term returns. However, in uncertain and risky early-stage investment contexts, company information is often opaque, and decision-making timeframes are compressed. Although there is an abundance of prior work on how investors make structured decisions based on their experience and expertise, there is a very limited understanding of how time-based factors can sway investment decisions. The circadian process is the 24-hour sequence that serves as an individual's internal timer influencing not only sleep cycles, but also attention and performance on a wide range of cognitive tasks. Understanding how the circadian process impacts early-stage investment holds implications for optimal investment decisions. We build on social cognitive theory and propose that investor-level factors (i.e., chronotypes) and environmental factors (time of the day) interact to influence the amount of information investors search for, and consequently, their investment decisions. We hypothesize and find that investors are influenced by the time of day they make early-stage investment decisions. Lark investors make better investment decisions in the morning, whereas owl investors make better decisions in the evening. Information search effort mediates this relationship.

Combining Value-Focused Thinking and PROMETHEE Techniques for Selecting a Portfolio of Distributed Energy Generation Projects in the Brazilian Electricity Sector

This article aims to propose a multi-criteria model to support decision-making from a portfolio in selecting technologies for Distributed Generation of Energy (DGE) projects based on the characteristics of the geographic space in Brazil. The decision model involves using multi-criteria to support the evaluation, prioritization, and selection of projects under a multistage decision-making process that fits into a strategic management cycle within the energy sector of Mato Grosso do Sul (Brazil). The over-classification techniques Preference Ranking Organization Technique for Enrichment Evaluations (PROMETHEE) II and V were applied under the Value-Focused Thinking (VFT) approach, reflecting the decision-maker or manager preferences among several conflicting criteria in the investment context of sustainable distributed energy generation projects. Based on real data, a numerical application is employed to view the steps of this decision model and illustrate the adequacy and effectiveness in practical issues of portfolio management.

Alternative Data in Investment Management: Usage, Challenges, and Valuation

<i>Alternative data</i> in finance is an umbrella term for diverse nontraditional datasets used by quantitative and fundamental institutional investors to enhance portfolio returns. Although the use of alternative data is a recent phenomenon, it was not until the last five years that it gained widespread acceptance and the sector started to evolve into a complex ecosystem of data originators, intermediaries, and investors. The alternative data industry faces several obstacles, including difficulty estimating a dataset’s value to investors and technical challenges in leveraging these datasets efficiently at a large scale. In this article, the authors provide an up-to-date description of the alternative data space as it relates to the institutional investment industry. The authors elaborate on what alternative data are and how they are used in investment management. The authors identify and discuss some of the key challenges that arise when working with alternative data. In particular, they address issues such as entity mapping, ticker-tagging, panel stabilization, and debiasing with modern statistical and machine learning approaches. The authors advance several methodologies for the valuation of alternative datasets, including an event study methodology they refer to as the <i>golden triangle</i>, the application of report cards, and the relationship between a dataset’s structure of information content and its potential to enhance investment returns. To illustrate the effectiveness of these methods, they apply them to a case study analysis of real-world healthcare data, delivering an improvement in revenue prediction accuracy from an 88% mean absolute error to a 2.6% mean absolute error. <b>Key Findings</b> ▪ The authors describe the alternative data industry in an investment context. They discuss the commercial incentives for different categories of organizations within the industry and methodologies to valuate alternative datasets. ▪ They identify key technical challenges in working with alternative data, including entity mapping, ticker-tagging, panel stabilization, and debiasing. ▪ Through a case study, they demonstrate how to use alternative data combined with imputation and optimization techniques to predict revenues of publicly traded companies within the healthcare sector.

The effect of perceptions of corporate identity and corporate social responsibility practices on investment intention

Orientation: Given the growing importance of sound corporate social responsibility (CSR) and considerable corporate investment in such activities, it is essential to understand the perceived impact thereof on stakeholder behaviour.Research purpose: As young individuals are particularly passionate about social responsibility, the effect of their perception of corporate identity (corporate values and corporate expertise) and CSR practices (relational, moral and discretionary actions) on their investment intention was investigated within an emerging market context.Motivation for the study: Previous researchers mainly focused on the effects of CSR on consumers’ intention to purchase products. Limited research has been conducted to understand the effect of CSR on decisions made by other key stakeholders, including investors.Research approach/design and method: Based on the theory of planned behaviour, a consumer behaviour-based dual-process model was adapted and tested in the investment context. An electronic questionnaire was distributed to potential young investors in the country to determine the effect of their perceptions of the CSR practices of a well-known South African financial company (Nedbank) on their intention to invest. The 1 649 responses were assessed through partial least squares structural equation modelling.Main findings: The adapted model was deemed reliable and valid in the investment context. Discretionary and relational CSR practices had more predictive relevance towards the corporate values dimension than the corporate expertise dimension of corporate identity. Moral CSR practices predicted the perception of both dimensions, which, in turn, influenced investment intention.Practical/managerial implications: Focus should be placed on communicating moral CSR practices, as it had a stronger prediction value (than discretionary and relational CSR practices) towards potential investors’ perceptions of the corporate expertise and values dimension of corporate identity which, in turn, strongly predicted investment intention.Contribution/value-add: This study makes a methodological contribution, as a dual-process model accounting for corporate identity and a range of CSR practices, based on consumer behavioural constructs, was applied in the context of investment decision-making within an emerging market.

Managerial overreliance on AI-augmented decision-making processes: How the use of AI-based advisory systems shapes choice behavior in R&D investment decisions

AI-augmented decision-making processes promise to transform strategic decisions around innovation management. However, despite a growing body of research on algorithmic management, very little is known about the behavioral effects of the AI-augmented decision-making process. This article utilizes a psychological perspective to research the interaction of artificial intelligence and human judgment, suggesting that AI-based advice affects human decision-making behavior and skews perceptions of decision outcomes. We present a vignette-based decision experiment involving 150 senior executives to examine the perception of AI-augmented decision-making at the individual level. In contrast to earlier research on algorithm aversion, we find that employing AI-based advisory systems positively affects choice behavior and amplifies decision quality perception. We further show how this overreliance on an AI-augmented decision-making process can be explained through both a higher degree of trust in the advisor and the attribution of a more structured process. This paper contributes to the emerging discussion as to the role of AI in management and the novel phenomenon of algorithm appreciation by investigating the interplay of human and artificial intelligence in strategic decision-making to show that AI-based advice is perceived as more trustworthy than human advice in an R&D investment context.

Putting the China-EU comprehensive agreement on investment in context

ABSTRACT This paper reviews the content of as well as the reception of the current state of the planned China-European union Comprehensive Agreement on Investment as per January 2021. Moreover, it forms some expectations regarding its economic effects. Key conclusions are that, in spite of a limited scope of new concessions beyond ones that are realized or planned anyway unilaterally, the agreement will likely boost not only investment but also trade, and it will likely establish a closer political cooperation between China and the European Union. One reason for the positive economic effects is the reduction in uncertainty about the mutually granted concessions for investment. However, further stimulating effects of the very agreement will be possible when accompanying it with concessions on trade in goods and services in the future.

Reaching for Returns in Retail Structured Investment

The growing market for retail structured investment products and empirical evidence for excessive pricing of such products raise the hypothesis that private investors show increased risk appetite in structured investment contexts. A two-stage framed field experiment building on cumulative prospect theory is designed to test this hypothesis. Subjects’ expectations regarding the future performance of an underlying index are elicited first. A bisection algorithm is then applied to derive the certainty equivalents of 20 simple individually tailored deposits. The results support the increased risk appetite hypothesis, revealing that subjects reach for substantial gains and underweight tail loss events when evaluating the deposits. Similar results emerge in a follow-up experiment where the uncertain deposits are replaced by risky versions. While previous studies propose that misperception of complex terms and optimism contribute to the mispricing of structured instruments, the current experiments show that nonstandard risk appetite manifests in the valuation of simple well-defined products, controlling for expectations. This paper was accepted by Manel Baucells, decision analysis.

Forests to the Foreigners: Large-Scale Land Acquisitions in Gabon

For the past decade, the land rush discourse has analyzed foreign investment in land and agriculture around the world, with Africa being a continent of particular focus due to the scale of acquisitions that have taken place. Gabon, a largely forested state in Central Africa, has been neglected in the land rush conversations, despite having over half of its land allocated to forestry, agriculture, and mining concessions. This paper draws on existing evidence and contributes new empirical data through expert interviews to fill this critical knowledge gap. We situate Gabon’s historic relationship with land, establishing the intrinsic relationship between colonial land tenure systems and present-day land rights. Our findings analyze the macro context of investors and investments, as well as the impacts related to rural–urban linkages and infrastructure development into the forests, civil society, human–environment relationships, and certification programs. While challenges continue to be experienced, the promise of Gabon’s first national land use plan—the use of sustainable concessions and mandatory forestry certification—offers a unique opportunity for Gabon to transition towards a future that better benefits its population while also protecting its natural resources.

Persuasive or polarizing? The influence of entrepreneurs' use of ingratiation rhetoric on investor funding decisions

We add richness and depth to investor decision-making research by exploring the influence of entrepreneurs' use of ingratiation rhetoric in their investor pitch presentations on investor funding decisions. Drawing on ingratiation theory, we model the effects of flattery, self-deprecation, opinion conformity, and self-promotion as distinct forms of ingratiation rhetoric. We do so independently and in tandem, conceptualizing the confluence of ingratiation forms as driving an overall aggregate effect on the amount of funding allocated by investors. We then theorize that entrepreneur charisma and entrepreneur performance are moderators of the aggregate effect. We test our model in the angel investment context with data from 789 entrepreneur pitch presentations to 27 investors on the Shark Tank television program from 2009 through 2020. We find that on their own, the different forms of ingratiation rhetoric have mixed effects, with flattery and self-deprecation negatively impacting investor funding amount and opinion conformity and self-promotion positively relating to funding amount. When used together, we find an overall negative effect, and this effect is positively moderated by entrepreneur charisma and entrepreneur performance. These findings shed new light on ingratiation rhetoric as a powerful force in entrepreneurs' efforts to secure funding.

Phnom Penh Kaleidoscope: Construction Boom, Material Itineraries and Changing Scales in Urban Cambodia

Cambodia’s urban environments have changed rapidly over the last decades, and perhaps especially over the last few years. After the 2018 election, democracy was widely perceived as eroding. This change created a new context for real-estate investment, which appeared more stable than ever. As investments exploded, the already fast-paced construction business accelerated. Combining an STS focus on distributed agency with an anthropological interest in practices of worlding, this paper analyzes urban transformations in Phnom Penh (and Sihanoukville) as effects of assemblage. Setting in motion new material itineraries, patterned flows of people and things, the construction boom has been felt across the urban spectrum. Modularizing and segmenting cities and filtering populations, these itineraries have also catalyzed changing perspectives on life in the cities, on local and regional relations with “the Chinese,” and on what the future has in store for Cambodia. Interspersing street-level observations and ethnographic materials with media reports and political commentary, I show tuk-tuk drivers, journalists, businessmen, politicians and academic scholars to be simultaneously engaged in assembling the city. Their vastly different projects and practices generate different urban scales – economic, cultural, political, and ethnic – which co-exist, layer, or overlap – incongruently. The resulting image is kaleidoscopic: Phnom Penh kaleidoscope.

Fishing among sharks – GP-LP investment syndication in later-stage venture capital

Venture capital (VC) syndication mainly occurs to compensate for a lack of resources, whether financial or otherwise. The current literature does not sufficiently explore the extent to which the motives differ for syndication between general partners (GPs) or between GPs and limited partners (LPs). This paper investigates this matter, using a qualitative research design and focusing explicitly on heterogenous GP-LP syndicates. We document substantial differences between GPs and LPs in terms of syndication motives and criteria. For example, GPs aim to maximize influence by pooling control rights, while LPs wish to play a more passive role. More broadly, we find that the investment context, particularly the target company’s business model, presents another factor for determining the most effective syndicate setup.

Signal configurations: Exploring set-theoretic relationships in angel investing

Anchored in signaling theory, we use a configurational approach to examine how new ventures credibly communicate their underlying firm quality, using a unique dataset of 117 new ventures that sought investment from a prominent angel group located in the Northeastern United States. Unlike existing research, which employs econometric models to reflect one best solution, we use crisp-set qualitative comparative analysis (cs/QCA) to understand signal configurations during the angel investment decision-making process. Our findings suggest that there are multiple paths to our three outcomes, passed small group screening, passed large group presentation, and passed due diligence/invested, validating notions of equifinality. Signals are complementary and configurations differ by industry sector. We also find that effective signal configurations differ by stage of investment, thereby offering evidence of cognitive dual processing on the part of the angel investors. We contribute to the literature on signaling by linking our findings to recent work on signal interactions and by highlighting the configurational and temporal aspects of signaling in the angel investment context. Implications are discussed.

Gestión del Conocimiento, una estrategia de innovación empresarial

La dinámica de los mercados en la actualidad sufre cambios contantemente creando la necesidad en las organizaciones de buscar estrategias que las permitan innovar, generar competitividad y contribuyan a su permanecía en el mercado a lo largo del tiempo. En este contexto la inversión en tecnología no es la única forma de innovar, el conocimiento se ha convertido en el activo más importante dentro de la gestión empresarial, por lo tanto, es el encargado de crear, detectar, transformar ese conocimiento y utilizarlo en función de sus necesidades. Por ello se plantea el objetivo de analizar la gestión del conocimiento como una estrategia de innovación en las empresas de la industria manufacturera en la ciudad de Machala. Se aplicó un estudio con enfoque cuantitativo, investigación exploratoria y correlacional. Se encuestaron a 38 empresas pertenecientes al sector manufacturero. Se utilizó el coeficiente de correlación y regresión para el análisis, los resultados fueron positivos para la relación de las variables gestión conocimiento e innovación. Finalmente, la gestión del conocimiento y la innovación persiguen generar beneficios a la empresa, transformando el conocimiento en valor, creando nuevos productos o servicios o mejorando sus procesos, con el fin de lograr su permanencia en el mercado.

Valuing a Lost Opportunity: An Alternative Perspective on the Illiquidity Discount

The illiquidity discount is the valuation discount investors apply to investments as compensation for their lack of immediate marketability. The authors analyze the concept of the illiquidity discount in the specific context of private investments whereby investors are precluded from accessing their capital, potentially for periods as long as several years. Although many explanations have been put forth for why such discounts should exist, as well as for their magnitude, the authors posit an alternative explanation based on the concept of opportunity cost: By holding an illiquid asset, an investor forgoes the potential excess returns that could have been generated by trading the liquid markets. The authors derive a basic mathematical model to show that the illiquidity discount should be directly related to the magnitude of trading opportunities on the horizon. Investors who believe their future investment opportunities to be favorable should command commensurately large illiquidity discounts for tying up capital. This implies that more skilled investors should require larger illiquidity discounts than their less skilled counterparts. Finally, the authors conjecture that the equilibrium illiquidity discount priced into private markets at any given time is primarily a function of investors’ perceived skill rather than actual skill. This highlights an important behavioral component to the pricing of private investments. TOPICS:Long-term/retirement investing, portfolio construction, real assets/alternative investments/private equity, theory, in portfolio management Key Findings ▪ Investors command illiquidity discounts for locking up capital in proportion to their perception of excess return opportunities on the horizon. ▪ More highly skilled investors will command higher illiquidity discounts because their opportunity cost for tying up capital is greater than for average investors. ▪ The equilibrium illiquidity discount for private investments will be a function of investors’ perceived skill rather than actual skill.